Sixteen universities known for their exclusivity and high price tags have been accused of violating antitrust laws in a class action filed on January 9.
The suit involves Section 568 of the Improving America’s Schools Act of 1994, an exemption to antitrust laws that allows competing universities to work together so long as they admit all students on a “need-blind basis.” The universities, according to the suit, are members of the “568 Presidents Group” in which members have agreed to use a common formula for determining a student’s (and their family’s) ability to pay for college. The exemption helps universities by allowing them to avoid bidding wars for low-income students, but prevents the schools from favoring wealthy students who would not need aid or scholarships, according to the Wall Street Journal.
According to the lawsuit, the schools instead engage in a price-fixing scheme that considers students’ ability to pay in some circumstances. For example, the suit alleges that some of the universities favor the children of wealthy donors and some consider a student’s finances when admitting them off the waitlist. Thus, the universities do not comply with the Section 568 exemption.
Regarding some of the universities’ considerations of family wealth and donation history in the admissions process, the lawsuit states, “Privileging the wealthy and disadvantaging the financially needy are inextricably linked; they are two sides of the same coin.”
The schools, Brown, CalTech, the University of Chicago, Columbia, Cornell, Dartmouth, Duke, Emory, Georgetown, MIT, Northwestern, Notre Dame, the University of Pennsylvania, Rice, Vanderbilt, and Yale, are all continuously ranked in the top 25 of the U.S. News & World Report rankings. The lawsuit claims that as a result of their price fixing, they have artificially inflated the net price of attendance for financial aid recipients. It goes on to say that an estimated 170,000 students were overcharged by “at least hundreds of millions of dollars” over almost two decades.
The lawsuit states that other universities, including Harvard, have declined to join the group that the suit labels the “568 Cartel” because it would limit financial aid awards. In fact, it states that Yale left the group in 2008 to, in then-Director of Student Financial Services, Caesar Storlazzi’s words, “give families more aid than they would have gotten under the consensus methodology.” However, the suit states that Yale evidently rejoined in 2018.
Additional Reading
Elite universities violated antitrust law in financial aid collaboration, lawsuit claims, ABA Journal (January 11, 2022)
Yale, Georgetown, Other Top Schools Illegally Collude to Limit Student Financial Aid, Lawsuit Alleges, The Wall Street Journal (January 10, 2022)
Elite Universities Antitrust Class Action Complaint (January 9, 2022)
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